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Superfunds March 2015
As the industry frames its response
to the Financial System Inquiry
Final Report and prepares for the
commencement of the tax white paper
process, we have seen a steady flow of
regulatory developments that will also
demand attention over coming months.
BOARD OF TAX REPORT ON SMALL
BUSINESS
In late January, the government released a
report by the Board of Taxation: Review of tax
impediments facing small business, along with
its response to the Board’s recommendations.
The report is focused on short and medium-term
priorities for small business tax reform, with a
particular focus on simplifying processes and
cutting red tape.
Of particular relevance to superannuation,
the report noted that the outcomes of the
Superannuation Guarantee (SG) penalty rules can
be “harsh, and in some cases disproportionate”.
The Board made a number of recommendations
to simplify the penalty rules, including the
suggestion that the SG charge be calculated on
an employee’s ordinary time earnings, rather
than their salary and wages. The government
has indicated that it supports some of these
recommendations, and will implement reforms
from 1 July 2016.
The Board also recommended that instead
of the current $450-per-month earnings
threshold, at which employers are required
to pay SG contributions for an employee,
employers should have the option of applying a
quarterly threshold of $1,350. The government’s
response to the report indicates that it does not
support this recommendation, as it could reduce
superannuation for some low-income earners
and would not reduce compliance costs for
the majority of small business that pay their SG
contributions monthly.
APRA DATA REPORTING
APRA has finalised its data reporting requirements
for ‘select investment options’ (SIOs) offered by
registrable superannuation entities (RSEs), and
released a new consultation package containing
four new forms that will collect data primarily for
the Australian Bureau of Statistics (ABS).
SIO reporting
Following a consultation in mid-2014, APRA has
now finalised two reporting standards specifically
for SIOs, and revised two existing standards to
include data items related to SIOs. In broad terms,
SIOs are non-MySuper investment options.
The new reporting requirements will involve
the submission of quarterly information about
investment performance, asset allocation and
member flows, as well as structural information
about these investment options.
Importantly, APRA has revised the quantitative
threshold at which an investment option must
be reported as an SIO. An option will now be
an SIO if it has assets exceeding $200 million, or
more than five per cent of total RSE assets. The
qualitative limbs of the definition have also been
adjusted to exclude investment options underlying
reserves or pre-MySuper default products, which
include accrued default amounts. APRA has also
decided it requires only quarterly reporting of
information relating to investment performance
and asset allocation under the two new reporting
standards, rather than quarterly and annual
reporting.
In combination with this, APRA indicates that
these changes will reduce the number of SIOs that
the industry will report on by 50 per cent, while
still ensuring that APRA receives information on a
significant proportion of superannuation industry
assets.
The two new standards, SRS 533.1 Asset
Allocation and Members’ Benefit Flows and SRS
702.1 Investment Performance, will take effect
from 1 July 2015. Under transitional relief, APRA
will initially allow RSE licensees 35 calendar days
to report under these standards, however, the
due date will be 28 calendar days after the end
of the relevant quarterly reporting period from 1
January 2017.
Changes to the existing reporting standards,
SRS 001.0 Profile and Structure (Baseline) and SRS
601.0 Profile and Structure (RSE) will take effect
from 30 June 2015. Revised SRF 001.0 will be due
for lodgement within 28 calendar days of 30 June
2015. For RSEs with a year of income ending 30
June, revised SRF 601.0 will be due within four
months after 30 June 2015, and thereafter within